Considerations in Filing a Chapter 11
Reorganizing under court supervision means tight deadlines, careful disclosure, and a plan creditors can believe in. Here's what to weigh before filing.
Who files first, and when the door opens to others.
Under 11 U.S.C. § 1121(b), only the debtor may file a plan during the first 120 days. After that, a party in interest can file one if the debtor hasn't filed, hasn't gotten a plan accepted within 180 days, or a trustee has been appointed.
The court can shorten or extend these exclusivity windows for cause under § 1121(d), but extensions are not automatic. Building a credible plan early protects your control of the case.
You can't ask for a vote without telling the full story.
Under 11 U.S.C. § 1125(b), a debtor cannot solicit acceptance or rejection of a plan unless the plan (or a plan summary) and a court-approved written disclosure statement have been sent to claim and interest holders first.
The disclosure statement is the document creditors rely on to make an informed vote. Adequate information, not advocacy, is the standard.
Acceptance, fairness, and feasibility.
A plan is confirmed only if every class of claims or interests accepts it, or the plan does not discriminate unfairly and is "fair and equitable" with each class that doesn't accept (§§ 1129(a)(9), 1129(b)(1)).
An unimpaired class is presumed to accept (§ 1126(f)). A class of claims accepts when at least two-thirds in amount and more than one-half in number of voting creditors approve.
The four tests every Chapter 11 plan must clear.
The plan must satisfy 11 U.S.C. § 1129(b)(2) for any class that hasn't accepted.
If any class is impaired, at least one impaired class (excluding insiders) must accept the plan. § 1129(a)(10)
Each impaired claim holder must accept the plan or receive at least what they would in a Chapter 7 liquidation. § 1129(a)(7)(A)
The court must find confirmation isn't likely to be followed by liquidation or further reorganization. § 1129(a)(9)(B)
A faster track, with firmer deadlines.
Small business cases trade longer exclusivity for tighter calendars and more compressed hearings. The confirmation standard doesn't change, only the schedule and the procedural shortcuts available along the way.
Only the debtor may file a plan during the first 180 days after the petition. § 1121(e)(1)
Plan and disclosure statement must be filed within 300 days. § 1121(e)(2)
The court may conditionally approve a disclosure statement and combine it with the confirmation hearing. § 1125(f)
Confirmation requirements are the same as a regular Chapter 11 case.
What goes inside, section by section.
A strong disclosure statement walks creditors from where the debtor has been, through where it is today, to a credible picture of what comes next. Each section earns its place.
Sets the table: who the debtor is, the purpose of the document, and how creditors should use it to evaluate the plan.
Background, company history, the reasons that led to bankruptcy, and the current status of operations.
Cost cuts, restructured contracts, new management, leadership changes, or other operational fixes already in motion.
What creditors would receive in a hypothetical Chapter 7 liquidation, the floor every confirmed plan must clear.
Proposed plan payments, financial projections, means of execution, business hopes and plans, and any request for conditional confirmation.
The liquidation analysis sets the floor. The feasibility section sets the ceiling. Everything in between has to make both believable.
Chapter 11 questions, answered plainly.
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"Mr. Max and his assistant Tami were very helpful, knowledgeable and friendly. Before I started my case I reached out to other lawyers — none of them gave me the information I needed to make the right decision. Tarbox Law gave me the time, listened to my concerns, and made the process easy. They took a huge weight off my shoulders. Thank you so very much, Mr. Max and Tami."
"Dear Mr. Tarbox and staff — thank you for your help and support during this difficult time in my life. I truly appreciate the generosity of time you and your staff gave to my case. I am humble and grateful. Lord bless you and your staff mightily!"
"Max is a great attorney. Very personable and truly cares about your case. You can't go wrong hiring Max to represent you in your bankruptcy case. He has a great staff also."
"The respect and wonderful service I received here is why I will be referring people to them in the future! To Mr. Tarbox, Ms. Pagendarm and their amazing staff — thank you so much!"
"Great lawyer and man. Very concerned about your legal problem and goes the extra mile to help! If you need help on a bankruptcy you can't go wrong here!"
"Really fast paced. They get stuff done fast, and the price was pretty reasonable as well — not too high."
The law often changes and each case is different. The information above is general and not a substitute for legal advice.
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